K+N targets pharma market with $100m Dubai investment

It is hoped the move will place it as one of the top five contract logistics players in the Gulf region.

At the centre of the Switzerland-based company's expansion plans will be a $100m (€75m) new facility in Dubai Logistics City (DLC), which will be up and running next year when the first development phase is completed.

The new site, which will contain 15,000 m² of logistics and warehouse space, adds to the company's existing 16,000 m² logistics terminal in the Jebel Ali free trade zone in the city.

It has been designed to meet pharma companies' highly specific requirements and will include temperature-controlled chambers (between two and eight degrees, and below 25 degrees) and a cool storage area (below zero degrees), Philip von Bismarck, contract logistics manager at K+N Dubai, told Outsourcing-Pharma.com.

"Our aim is to build a global hub for certain medicines such as bird flu vaccines, as well as a regional distribution network for pharmaceutical companies," said von Bismarck.

"Dubai is a highly strategic location in case of a pandemic crisis, as it is located in the middle, between Asia and Africa."

According to von Bismarck, drug makers have historically been stocking their medicines near production sites, in Europe for example, but increasingly realise that building their stock in the Middle-East proves to be more efficient as it allows a fast reaction time in case of emergency.

K+N's pharma clients are very demanding and sometimes require dispatching medicines from Europe to the Middle-East in a very short timeframe, which is very expensive as it involves air freight, explained von Bismarck.

"What we offer them is the opportunity to build a stock directly inside the region, where they can restock gradually via sea-freight which is much cheaper as it is slower," he said.

"Then we can transport overland the products to their destination very quickly when needed.

For drug makers, this means time and cost savings."

These advantages could prove highly appealing for pharma companies who are trying to increase their margins and some are already showing interest.

"Most of the pharma clients we have been speaking to are very excited," said Von Bismarck, adding that half of the new facility was already occupied as K+N has signed several new contracts with pharmaceutical companies.

Another attractive benefit is that the facility is still in the construction phase so K+N has the possibility to customise it according to its clients requirements.

"In the second phase of the development, which will give us an extra 15,000m² space, we will be able to go further into the customisation and add special equipment if our client needs us to," said von Bismarck.

The firm currently deals with a number of big pharma firms, including Pfizer, Baxter and Novartis and has designed its new project to meet further the industry's demands.

While he wouldn't reveal what portion of K+N's business was generated by the pharma industry, von Bismarck said it is a "considerable" part and he expects it to increase.

He also said the company is now looking to make acquisitions, as well as organic growth.

Meanwhile, the group plans to further expand its contract logistics operations and capacity across the entire Gulf region to over 200,000 m² by 2010.

"Ultimately, our objective is to become one of the region's top five contract logistics providers," said Dirk Reich, executive vice president of Contract Logistics at K+N, said during a press conference in Dubai last week.